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11-02-2006, 06:46 PM
GM profits climb, foreign carmakers post gains in October. (http://www.freep.com/apps/pbcs.dll/article?AID=/20061102/BUSINESS01/611020398/1014)
Sarah A. Webster and Katie Merx - Detroit Free Press - Nov. 2, 2006
http://www.cleanmpg.com/photos/data/501/Chevrolet_Silverado.jpg
GM Truck sales rebound … by 33%.
Profitable truck sales roared last month - thanks to falling gas prices and an easy comparison against October 2005, when sales collapsed following that summer's employee-pricing craze.
The light-truck category, which includes the pickups, SUVs and vans that Detroit still relies on most, surged 14.8% in October, compared with the same month last year. The gains in trucks more than made up for the 2.9% falloff in car sales.
The bottom line: Industrywide sales increased 6.1% over October '05. Still, last month was the second-worst in terms of volume so far this year.
Customers, including businesses and governments, last month bought 1.2 million cars and trucks, and 56.9% of them came from local automakers. That's up from 55.4% a year ago.
While Toyota Motor Corp. and several other foreign automakers posted double-digit gains in truck sales, General Motors Corp., Ford Motor Co. and DaimlerChrysler AG actually increased their share of the profitable truck market a little to 67% during the month.
Locally, the surge in truck sales seemed to benefit GM most. GM's truck sales were up 32.9% in October compared to a year ago, driving the company's overall sales up 17.3%, despite a falloff in car sales.
DaimlerChrysler also recorded a boost in truck sales, which were up 11.1% for the German-American automaker. Jeep and Dodge produced most of the gains. But the increase was offset by a 26.4% decline in car sales at DaimlerChrysler, leading the company to post an overall decline of 1.6% for the month.
The story was just the opposite at Ford. While truck sales were up a slight 0.7% in the month, car sales gained 22.0%, with the Ford Fusion, Mercury Milan and Lincoln MKZ driving up orders. Ultimately, Ford sales were up 8.0% in October compared to a year ago.
"Trucks bounced back during the month," as gas prices subsided, Paul Ballew, executive director of market and industry analysis at GM, observed during a conference call with analysts and journalists.
Chrysler also boasted that its truck sales drove up results in dealer showrooms nationwide.
"The retail side of our business has really shown a lot of strength for us in October, especially with key products such as Jeep Commander, Dodge Ram pickup ... Jeep Liberty," Steven Landry, Chrysler Group vice president of sales and field operations, said during a conference call.
Most industry analysts agree that domestic automakers had an easy year-over-year comparison with October 2005. Last year, the auto industry recorded its worst October for U.S. sales in 13 years as many consumers stayed out of showrooms following a summer of deep discounts, and sales fell 14.1%.
The comparisons were so easy that several automakers pointed to the strength of their retail sales figures, which exclude bulk fleet sales to rental companies, other businesses and government agencies.
But for the year, the performance by local automakers cannot give the local economy much comfort. Sales for the year are now down 9.4% at GM, 7.4% at Ford and 6.8% at DaimlerChrysler AG.
The decline in sales last October also hit trucks the most, meaning pickups, SUVs and vans had an easier comparison this October compared with the same month a year ago. Last year, industrywide truck sales were down 22.1%.
Still, Art Spinella, president of CNW Marketing Research in Bandon, Ore., said in a recent interview that the surge in truck sales could give automakers a lift in revenue and profit during the fourth quarter.
"Domestics are doing well," Spinella said, referring to the truck side of the business.
Ballew at GM agreed that the lift in truck sales could be a bonus for GM.
"What we saw in terms of the recovery in trucks I would view as pluses for us," he said. "If sustained for the back end of the fourth quarter into 2007, it would certainly be a plus for General Motors."
Foreign automakers also tapped into the month's truck sale increase.
Truck sales were up 33.6% at Hyundai, 16.3% at Toyota, 11.1% at Honda and 8.2% at Nissan - leading all of those Detroit rivals to post monthly sales gains in October. For the year, all those automakers have also posted sales gains, except Nissan, whose sales are off 6.2%.
Brad Bradshaw, senior vice-president of sales and marketing for Nissan in North America, said the decline is due to the company's cadence of new products, which are largely coming to market now. He said the new Nissan Versa and Sentra cars, as well as the Infiniti G35, are being warmly received in the marketplace.
And while he noted that "every SUV was up" in the company's lineup, many consumers are still trading in less fuel-efficient models for more economical cars.
"We're still getting a lot of trade-downs," he said.
Toyota's sales rose 9.2%, compared with last October, to 189,011, across its three brands. It was the Japanese automaker's best-ever October of sales in the United States.
Despite the sales increase, some dealers - including mega-dealers, such as AutoNation Inc. of Ft. Lauderdale, Fla. - continued to complain about high inventories.
Dealers take out hefty loans to pay for the vehicles they keep on their lots, an expense that can become painful when inventories swell or interest rates rise.
Even so, local automakers said they were generally satisfied with their inventory levels.
GM's Ballew said the company was pleased with its 1.05 million cars and trucks.
"We feel like we're finding the right balance in terms of inventory levels," Ballew said.
Ford said it has 622,000 vehicles in stock, compared with 729,000 at the end of October 2005. What's more, George Pipas, the company's top sales analyst, said it was a better split of cars and trucks than in the past.
"A year ago, 23% of our stock was car and 77% was truck," he said. "Now we have got 31% car and 69% truck."
Chrysler, which blamed heavy inventories of 2006 trucks and SUVs for a $1.5 billion loss in the third quarter, said heavy incentives in October helped it to lower its dealer stocks.
The automaker reduced its dealer inventory to 508,724 vehicles on Oct. 31, down from 533,220 at the end of September.
Landry said the company also has addressed its bank of unassigned vehicles - cars and trucks it built without dealer orders - that had grown as high as 100,000 in mid-September.
"There is a very small amount of unassigned inventory, that we have as a company, none of which is 2006 model" vehicles, Landry said. "It's all 2007."
Landry said the company plans to eliminate its stores of unassigned vehicles by the end of the year and has no plans to build it up again.
"We're certainly not condoning it," Landry said. "It's not part of our business plan. It's just a situation that our dealers and ourselves are working on together to pare it down by the end of the year."
Sarah A. Webster and Katie Merx - Detroit Free Press - Nov. 2, 2006
http://www.cleanmpg.com/photos/data/501/Chevrolet_Silverado.jpg
GM Truck sales rebound … by 33%.
Profitable truck sales roared last month - thanks to falling gas prices and an easy comparison against October 2005, when sales collapsed following that summer's employee-pricing craze.
The light-truck category, which includes the pickups, SUVs and vans that Detroit still relies on most, surged 14.8% in October, compared with the same month last year. The gains in trucks more than made up for the 2.9% falloff in car sales.
The bottom line: Industrywide sales increased 6.1% over October '05. Still, last month was the second-worst in terms of volume so far this year.
Customers, including businesses and governments, last month bought 1.2 million cars and trucks, and 56.9% of them came from local automakers. That's up from 55.4% a year ago.
While Toyota Motor Corp. and several other foreign automakers posted double-digit gains in truck sales, General Motors Corp., Ford Motor Co. and DaimlerChrysler AG actually increased their share of the profitable truck market a little to 67% during the month.
Locally, the surge in truck sales seemed to benefit GM most. GM's truck sales were up 32.9% in October compared to a year ago, driving the company's overall sales up 17.3%, despite a falloff in car sales.
DaimlerChrysler also recorded a boost in truck sales, which were up 11.1% for the German-American automaker. Jeep and Dodge produced most of the gains. But the increase was offset by a 26.4% decline in car sales at DaimlerChrysler, leading the company to post an overall decline of 1.6% for the month.
The story was just the opposite at Ford. While truck sales were up a slight 0.7% in the month, car sales gained 22.0%, with the Ford Fusion, Mercury Milan and Lincoln MKZ driving up orders. Ultimately, Ford sales were up 8.0% in October compared to a year ago.
"Trucks bounced back during the month," as gas prices subsided, Paul Ballew, executive director of market and industry analysis at GM, observed during a conference call with analysts and journalists.
Chrysler also boasted that its truck sales drove up results in dealer showrooms nationwide.
"The retail side of our business has really shown a lot of strength for us in October, especially with key products such as Jeep Commander, Dodge Ram pickup ... Jeep Liberty," Steven Landry, Chrysler Group vice president of sales and field operations, said during a conference call.
Most industry analysts agree that domestic automakers had an easy year-over-year comparison with October 2005. Last year, the auto industry recorded its worst October for U.S. sales in 13 years as many consumers stayed out of showrooms following a summer of deep discounts, and sales fell 14.1%.
The comparisons were so easy that several automakers pointed to the strength of their retail sales figures, which exclude bulk fleet sales to rental companies, other businesses and government agencies.
But for the year, the performance by local automakers cannot give the local economy much comfort. Sales for the year are now down 9.4% at GM, 7.4% at Ford and 6.8% at DaimlerChrysler AG.
The decline in sales last October also hit trucks the most, meaning pickups, SUVs and vans had an easier comparison this October compared with the same month a year ago. Last year, industrywide truck sales were down 22.1%.
Still, Art Spinella, president of CNW Marketing Research in Bandon, Ore., said in a recent interview that the surge in truck sales could give automakers a lift in revenue and profit during the fourth quarter.
"Domestics are doing well," Spinella said, referring to the truck side of the business.
Ballew at GM agreed that the lift in truck sales could be a bonus for GM.
"What we saw in terms of the recovery in trucks I would view as pluses for us," he said. "If sustained for the back end of the fourth quarter into 2007, it would certainly be a plus for General Motors."
Foreign automakers also tapped into the month's truck sale increase.
Truck sales were up 33.6% at Hyundai, 16.3% at Toyota, 11.1% at Honda and 8.2% at Nissan - leading all of those Detroit rivals to post monthly sales gains in October. For the year, all those automakers have also posted sales gains, except Nissan, whose sales are off 6.2%.
Brad Bradshaw, senior vice-president of sales and marketing for Nissan in North America, said the decline is due to the company's cadence of new products, which are largely coming to market now. He said the new Nissan Versa and Sentra cars, as well as the Infiniti G35, are being warmly received in the marketplace.
And while he noted that "every SUV was up" in the company's lineup, many consumers are still trading in less fuel-efficient models for more economical cars.
"We're still getting a lot of trade-downs," he said.
Toyota's sales rose 9.2%, compared with last October, to 189,011, across its three brands. It was the Japanese automaker's best-ever October of sales in the United States.
Despite the sales increase, some dealers - including mega-dealers, such as AutoNation Inc. of Ft. Lauderdale, Fla. - continued to complain about high inventories.
Dealers take out hefty loans to pay for the vehicles they keep on their lots, an expense that can become painful when inventories swell or interest rates rise.
Even so, local automakers said they were generally satisfied with their inventory levels.
GM's Ballew said the company was pleased with its 1.05 million cars and trucks.
"We feel like we're finding the right balance in terms of inventory levels," Ballew said.
Ford said it has 622,000 vehicles in stock, compared with 729,000 at the end of October 2005. What's more, George Pipas, the company's top sales analyst, said it was a better split of cars and trucks than in the past.
"A year ago, 23% of our stock was car and 77% was truck," he said. "Now we have got 31% car and 69% truck."
Chrysler, which blamed heavy inventories of 2006 trucks and SUVs for a $1.5 billion loss in the third quarter, said heavy incentives in October helped it to lower its dealer stocks.
The automaker reduced its dealer inventory to 508,724 vehicles on Oct. 31, down from 533,220 at the end of September.
Landry said the company also has addressed its bank of unassigned vehicles - cars and trucks it built without dealer orders - that had grown as high as 100,000 in mid-September.
"There is a very small amount of unassigned inventory, that we have as a company, none of which is 2006 model" vehicles, Landry said. "It's all 2007."
Landry said the company plans to eliminate its stores of unassigned vehicles by the end of the year and has no plans to build it up again.
"We're certainly not condoning it," Landry said. "It's not part of our business plan. It's just a situation that our dealers and ourselves are working on together to pare it down by the end of the year."